Austin wants to expand its airport to the South Terminal, company operating it files lawsuit

A lawsuit was filed Monday against the City of Austin by Lonestar Airport Holdings, LLC, the company that operates out of the South Terminal at the Austin-Bergstrom International Airport.

AUSTIN (KXAN) – The company that operates the South Terminal at the Austin-Bergstrom International Airport filed a lawsuit Monday against the City of Austin for reportedly breaking its contract with Lonestar Airport Holdings, LLC. in an attempt to expand the main airport.

Lonestar said it invested over $20 million in renovations at the South Terminal after the city’s department of aviation entered into a 40-year contract with the independent group in 2016.

The lawsuit claims a few years later, the department came back with an “unsolicited offer to buy out Lonestar’s rights under the Agreement for a mere $10 million.” That was in November of 2019 and was rejected by the company, which said the move was a "complete surprise" and "a mere fraction of the actual value of Lonestar's business and its rights under the Agreement."

The lawsuit then claimed in May of 2022, the city came back with a final offer: Just north of $1.9 million. That offer was also rejected.

That's when the city started looking to take the land, which is city-owned, through eminent domain, the lawsuit said. Which, according to Lonestar, is prohibited in their agreement.

“The Department will continue to fulfill its contractual obligations and exercise its rights under the South Terminal lease,” the DOA wrote when KXAN reached out about the lawsuit. “The City continues to move forward with acquiring the leasehold through condemnation.”

The lawsuit claims the city is working to expand the main airport by reclaiming local control. Lonestar claimed it also had plans to expand, but that the city undermined the process.

"This action is necessary to increase capacity for more flights at AUS through the Airport Expansion and Development Program. A vital component of the Program is the new midfield concourse, which necessitates the future closure of the South Terminal," the city wrote.

The company requested a judge decides whether the city is breaching its obligations without compensating Lonestar for the full value of the South Terminal.

“The City cannot rewrite a contract that it voluntarily entered into merely because a new administration has a different view as to the desirability of public-private partnerships, especially after reaping the benefits of that partnership," the lawsuit said.